The Gazette 1993

JAN/FEB 1993 '

GAZETTE

9. Burke, Law of Title Insurance, p.3, Little, Brown & Co. (1986). While there is evidence that the first title company was formed in 1853, the first title company to be chartered was in Philadelphia in 1876. See Johnstone, Title Insurance, 66 Yale L. J., 492, note 1 (1957). 10. Burke, supra note 9, at p. 3. 11. Ibid at p. 4. Title insurance was also preferred because the title insurance companies assumed the responsibility for negotiating and litigating claims and had the financial wherewithal to pay them. Johnstone, supra note 9, at pp.502-3. 12. 1990 Fact Book, American Land Title Association, p. 10. In 1989 the title insurance industry actually posted a pre-tax operating loss prior to investment income of $154 million. Ibid. 13. Rooney, Attorneys Guide to Title Insurance, ch.2, p.7, Illinois Institute for Continuing Legal Education, (1984). 14. See Johnstone, supra note 9, at p.507. The largest title insurer in the United States today, Chicago Title, was formed as the successor to an abstract company which possessed copies of the land records of Cook county, Illinois, the originals of which were destroyed, along with the county courthouse holding them, in the Chicago fire of 1871. Burke, supra note 9 at p. 8. 15. A title insurance company is "in the unique position of being able, through its own work, to eliminate many claims." Burke, supra note 9, at p.22. 16. Ibid at p.29. 17. Miller & Starr, 3 California Real Estate, p.6, Bancroft-Whitney (2nd ed. 1989). 18. Johnstone, supra note 9, at p. 516. It also diffuses the title insurance industry's emphasis on the security offered by title policies. Rooney, supra note 13, at ch.2, p. 23. 19. Rooney, supra note 13 at ch. 2, p. 10. 20. Christensen, The Unauthorized Practice of Law: Do Good Fences Really Make Good Neighbors - Or Even Good Sense?, 1980 Am. Bar. Fdn, R. J., 207. 21. Payne, Title Insurance and the Unauthorized Practice Of Law Controversy, 53 Minn. L. Rev., 423, 473 (1969). 22. Goldner, supra note 7, at p. 661. 23. Shick & Plotkin, Torrens in the United States: A Legal and Economic History and Analysis of American Land Registration Systems, pp.8-9, D.C. Health and Company (1978). 24. Ibid at p.58. See also Powell, supra note 3, para. 90813]. 25. Shick & Plotkin, supra note 23, at p. 58. 26. See Johnstone, supra note 9, at pp. 514-5. See also Goldner, supra note 7, at pp.690-709. •

insistence on title insurance. At present, there are only four states with any noteworthy title registration activity - Hawaii, Illinois (Cook county only), Massachusetts and Minnesota - and half of those states which originally had Torrens statutes have actually repealed their legislation. 25 Conclusion The title insurance industry has established a firm and consolidated foothold in the United States and title insurers have sought to offer their services in Canada, Europe and elsewhere. It is clear that the insistence on title insurance by institutional lenders has fostered the growth and success of the industry. Lawyers, who have by no means been entirely excluded from the conveyancing process where title insurance is prevalent (instead of title searching they negotiate title insurance coverage on behalf of their clients), generally, with some exceptions, have not opposed the industry's progress and development. But there are others who forcefully argue that title insurance just masks the problems of the recording system and that title registration is ultimately in the best interests of the Public. However, there is also general recognition among this group and some observers that radical modification of the existing statutory framework of the Torrens system would be an essential first step in establishing wider acceptance. This is seen to include: the use of administrative as opposed to judicial hearings at the time of initial registration; reduction in the cost of initial registration by modest increases in registration charges for subsequent transfers; limiting the types of exceptions and mcumbrances exempted from registration; embracing the concept o f possessory title so that after a statutory period uncontested titles become indefeasible and absolute; a nd compulsory registration upon voluntary transfer. 26 Statutory reform notwithstanding, additional issues would also need to he addressed if title registration is to have any hope of future success.

Whether the focus is initially statewide, regional or across the country, proponents of Torrens would not only need an effective strategy to create greater public awareness of the perceived benefits of title registration, they would also need to convince the lenders that a system of title registration is better for them than title insurance and at the same time persuade the politicos that change is desirable. To find allies among the legal community and, perhaps, those powerful corporations which acquire and dispose of real property on a regular basis would be a beneficial ingredient in any crusade for title registration. However, there is currently no reason to believe that title insurance will not be the first choice of the American public for the foreseeable future and with that, according to the critics of the recording system, the potential risks of title impairment associated with unregistered land will remain. Endnotes 1. Each state in the United States has established its own statutory scheme of maintaining the records to land in its jurisdiction, usually at the county level. The method of organising the records of unregistered land is generally known as the recording system, where recorded instruments provide evidence of title (not unlike the Registry of Deeds) as opposed to title registration, where ownership of the title itself is registered. 2. 1 Patton on Land Titles, p.10, West ' Publishing Co. (2nd ed., 1957). 3 Ibid at pp. 9-11; 6A Powell on Real Property, para. 90411], Mattew Bender (Rev. 1992). On the Statute of Enrollment (1535), see Megarry & Wade, The Law of Real Property, p.1170 (4th ed., 1984). 4. See Powell, supra note 3, at para. 90413]. 5 Named after Irish-born Sir Robert Richard Torrens, premier of South Australia, who introduced the system to Australia patterned on the title certification of ships. He was also the author of the Record of Title (Ireland) Act, 1865, Ireland's first title registration statute. See Wylie, Irish Land Law, ch. 21. ' Registration: A New Proposal for Effective Implementation, 29 UCLA L. Rev., 661, 689 (1982). 8. Watson -v- Muirhead, 57 Pa. 161 (1868). 6. Powell, supra note 3, at para. 90917]. 7 Goldner, The Torrens System of Title

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